DISTRICT COURT OF QUEENSLAND

CITATION:	Glascott & Anor v Mercedes-Benz Financial Services Australia Pty Ltd & Anor (No. 2) [2024] QDC 226	
PARTIES:	JOHN ERNEST GLASCOTT AND MARYANNE RUTH GLASCOTT
(plaintiffs)
v

MERCEDES-BENZ FINANCIAL SERVICES AUSTRALIA PTY LTD A.C.N. 074 134 517
(first defendant)

and
MERCEDES-BENZ AUSTRALIA/PACIFIC PTY LTD A.C.N. 004 411 410
(second defendant)
	
FILE NO:	15/2016	
DIVISION:	Civil	
PROCEEDING:	Claim	
ORIGINATING COURT:	Cairns	
DELIVERED ON:	20 December 2024	
DELIVERED AT:	Cairns	
HEARING DATE:	Written Submissions	
JUDGE:	Morzone KC DCJ	
ORDER:	1.	The defendants will pay the plaintiffs’ costs of the proceeding (including any reserved costs) to be assessed on the standard basis.	
CATCHWORDS:	CIVIL PROCEDURE – COSTS AFTER TRIAL – cross-applications for costs of proceedings and counter claim – costs.	
LEGISLATION:	Civil Proceedings Act 2011 (Qld), s 15
Uniform Civil Procedure Rules 1999 (Qld), rr 681, 697.
	
CASES:	BHP Coal Pty Ltd v O & K Orenstein & Koppel AG (No. 2) [2009] QSC 64 
Kilvington v Grigg & Ors (No. 2) [2011] QDC 37
Latoudis v Casey (1990) 170 CLR 534
Mobile Innovations Ltd v Vodafone Pacific Ltd [2003] NSWSC 423
Oshlack v Richmond River Council (1998) 193 CLR 72
	
COUNSEL:	J Jacobs for the Plaintiffs
M Jonsson KC for the First and Second Defendants	
SOLICITORS:	WGC Lawyers for the Plaintiffs
Thynne  + Macartney for the First and Second Defendants	

[1]	The plaintiffs apply for costs in the wake of the favourable judgment on the claim, but the defendants contend that those costs should be assessed on the Magistrates Court scale.  The first defendant further seeks the costs of its counterclaim.
[2]	The parties have provided detailed written submissions.
[3]	The plaintiffs seek costs on the claim on the standard basis on the District Court Scale appliable to the judgment sum, and contend that the Magistrates Court scale ought not to apply for want of jurisdiction for the preservation of the car pending trial.
[4]	Whilst the defendants conceded that costs ought follow the event in respect of the claim, they contend that the usual rule ought be tempered by the operation and effect of rr 697(1) and 697(2) of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) such that those ought to be assessed on the standard basis on the Magistrates Court scale for a judgment in excess of $50,000.00.  And further, the first defendant seeks its costs in the wake of the favourable judgment on its counterclaim for possession and delivery up of the car.
[5]	It seems to me that the claim was properly commenced and heard in the District Court, and the plaintiffs should have their costs assessed on a standard basis.  The counterclaim for possession was of little moment in the trial and not contested, and the first defendant abandoned the contested counterclaim for rectification during the trial. 
[6]	In the end, it seems to me that the appropriate order is that the plaintiff ought to be awarded the costs of the proceeding to be assessed on the standard basis.
Costs
[7]	The court has a broad power to award costs in a proceeding.  
[8]	The costs of a proceeding do not include the costs of an application in the proceeding, unless the court orders otherwise.  Reserved costs of an application will follow the event, unless the court orders otherwise.
[9]	The general rule pursuant to r 681 of the Uniform Civil Procedure Rules 1999 (Qld) is that costs of a proceeding are in the discretion of the court but follow the event, unless the court orders otherwise. 
[10]	This statutory conferral of jurisdiction to award costs gives this Court the widest possible power and discretion in the allocation of costs.  The discretion must be exercised judicially, that is to say, not arbitrarily, capriciously or so as to frustrate the legislative intent.  It follows that costs must necessarily be awarded on principle, not according to whim or private opinion.
[11]	The Court should not lose sight of the fundamental principle that costs orders serve a compensatory function, not a punitive one.  This fundamental principle was explained by Mason CJ in Latoudis v Casey, as follows:
“If one thing is clear in the realm of costs, it is that, in criminal as well as civil proceedings, costs are not awarded by way of punishment of the unsuccessful party. They are compensatory in the sense that they are awarded to indemnify the successful party against the expense to which he or she has been put by reason of the legal proceedings: Cilli v Abbott, at 111.”
[12]	Similarly, in the same case, McHugh J said:
“An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation: Kelly v Noumenon Pty Ltd (1988) 47 SASR 182 at 184. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. It may, and usually will, be made even though the action has failed through no fault of the unsuccessful party.  In Cilli v Abbott (1981) 53 FLR 108, Keely, Toohey and Fisher JJ pointed out (at 111) that “the object of costs is not to penalise; it is to indemnify the successful party in regard to expense to which he has been put by reason of legal proceedings”; see also Anstee v Jennings [1935] VLR 144 at 148.”
[13]	Therefore, the court should act with a degree of hesitancy and only in an unusual or exceptional case before depriving a successful party of costs, or even order a successful party to pay costs.
[14]	Costs are ordinarily assessed on the standard basis, unless the rules or a court order requires assessment on an indemnity basis. 
Should the plaintiff’s costs be assessed on the District Court Scale or Magistrates Court Scale for Judgments over $50,000?
[15]	Whilst the defendants conceded that costs ought follow the event in respect of the claim, they contend that the usual rule ought be tempered by the operation and effect of  rr. 697(1) and 697(2) of the Uniform Civil Procedure Rules such that those ought to be assessed on the standard basis on the Magistrates Court scale for a judgment in excess of $50,000.00.
[16]	The amount of that judgment falls within the monetary jurisdictional limit of the Magistrates Court of $150,000 at commencement, applying the current definition of the expression ‘prescribed limit’ within s 2 of the Magistrates Courts Act 1921 (Qld), and applying s 4AAA of that same Act to disregard interest for the sake of the required comparison.
[17]	I do not accept that the relief sought and achieved by the plaintiffs is ‘a judgment that, when the proceeding began, could have been given in a Magistrates Court’, caught by s 691(1) for two reasons.  Firstly, the plaintiff’s prayer of relief included an interlocutory order pursuant to r 250 of the Uniform Civil Procedure Rules 1999 (Qld) for the preservation of the subject car and for the car to be retained in the custody of the plaintiffs pending the resolution of the proceedings, which was not contested.  And secondly, the defendants joined issue with the plaintiff's claim regarding the newness of the car coupled with counterclaim for rectification of the Asset/Hire Purchase Agreement in the counterclaim filed 21 March 2016 (which was later abandoned at trial).  
[18]	Since the relief was not within the jurisdiction of the Magistrates Court when the proceeding began in this court on 3 February 2016, r 697(1) is not satisfied.  
[19]	Even if r 196(1) was satisfied, r 697(2) requires that the Plaintiff’s costs be confined to quantification: ‘as if the proceeding had been started in the Magistrates Court, unless the court orders otherwise’.  In my view another order is warranted having regard to the complexity of the legal and factual issues, the preservation of the car for expert evidence, and the late abandonment of rectification relief.
[20]	It seems to me that the claim was properly commenced and heard in the District Court, and the plaintiffs should have their costs assessed on a standard basis.  
Should the defendants have their costs of the counter-claim?
[21]	The first defendant has succeeded upon its counterclaim to the extent that the first defendant has been awarded judgment on the counterclaim, with an associated order requiring the delivery up of the subject motor vehicle in specie by the plaintiffs.
[22]	While it is true that the first defendant succeeded in a discrete part of the counterclaim, it was hardly contested and was of little moment in the trial. The other part of the counterclaim, which relied on rectification, was belatedly abandoned, and the balance of the counterclaim otherwise failed. I found that the first defendant was not ready, willing, and able to perform their obligations under the agreement. By the time the first defendant purported to terminate the agreement, they were in fundamental breach of the agreement from at least 3 May 2014.  While the car remained in the plaintiffs’ possession by the time of judgment, it was of no value and was useless to them, and the first defendants failed to take up the plaintiffs’ multiple offers to collect it.
[23]	In those circumstances, the first defendant’s minor success arose out of issues that were heard and determined as part of the costs in the proceeding. 
Orders
[24]	For these reasons, I order that the defendants will pay the plaintiffs’ costs of the proceeding (including any reserved costs) to be assessed on the standard basis.

Judge Dean P Morzone KC